According to the NASD, investors who bought into annuities made at least 7000 complaints about variable annuities in 2003. Yet brokers are still pitching these products because the commissions are irresistible. Never lock your money up in an annuity money prison! A professor at Baylor University and expert witness on annuity products, William Reichenstein says that over the long term, simply investing in a typical conservative portfolio (conservative stocks and bonds or the equivalent ETF’s) easily beats an index annuity. According to Reichenstein, over the last 44 years, the average index annuity would have underperformed a very conservative portfolio consisting of 85% one-month T-bills, and 15% large-cap stocks by nearly two percent per year, on average. The content in this video does not constitute individual investment, legal, tax or other professional advice or advice to buy, sell or hold securities. If you need financial advice, consult with a fee-ONLY financial planner who doesn’t earn commissions off of the products that he/she sells. Why brokers push annuities www.stockbroker-fraud.com Great article on annuities www.utsandiego.com Don’t believe the broker hype on annuities www.businessweek.com Wikipedia on annuities en.wikipedia.org Case study on annuities VS unmanaged index funds lsb.scu.edu Index funds win again www.nytimes.com Annuities are lousy for estate planning www.smartmoney.com State by state insurance guarantees www.annuityadvantage.com Protections …

True, but between ’66 and ’83 the market was about even in approx 70, 73, 76, 81 and then from 83 onward. Even T. Rowe Price admits variable annuities are meant to be held for 10 – 20 years. Most investors are going to invest in﻿ bond sub funds too, which would more than offset a sideways market. My analogy is actually an extreme that should favor annuities. I’m all for Bogleheads and ETF’s. Insurance company products are just not worth the high fees and the risk of locking your money in prison.

Your facts are somewhat off. You implied the DJI never lost money over 12 years. Between the 1966 and 1978, the DJI did lose money. Moreover, money withdrawn for expenses during that period would not have been able to recover. SPIAs can be combined with stock and bond index funds to generate an enduring portfolio. Retirement theorists have supported this approach including Walter﻿ Updegrave (of CNN), Moshe Milevski; Jim Otar; and Wade Pfau. You can see the Bogleheads forum for more info.

As with the first poster, I agree that most annuities are terrible, and that people should﻿ be warned against using them.
However, I’ve heard persuasive arguments that SPIAs (single premium immediate annuities) for a portion of a nest egg are useful in stabilizing a portfolio during the spending phase. I wouldn’t buy one now, because of the return they’re paying. But, some people could benefit from them at various points in the future.